Week in review: A virtual gold mine

VMware offering stands out during a rocky week, tech issues land in court, and Wi-Fi, everywhere, for free.

While the rest of the stock market was taking a wild roller-coaster ride this week, a tech public offering got a warm welcome from investors.

Investors in VMware's initial public offering got a rocket ride as the highly anticipated IPO launched out of the gate with an initial trade of $52 a share. VMware investors who snapped up shares at $29 a pop as part of the IPO offering reaped a profit of 79 percent on that first trade.

VMware's stellar stock offering shows that virtual machines are starting to add up to real dollars. Virtual machines, the technology that VMware helped pioneer, allow one computer to act as many, whether it's a Mac running Windows and the Mac operating system at the same time or a massive server running multiple instances of Windows and Linux simultaneously. Once a niche technology, virtualization is expanding rapidly as businesses try to get more bang for their server buck.

Both open-source rivals and commercial software makers see a chance to win business customers by offering similar features to VMware, but at a far lower price.

One day after the spectacular public offering of virtualization company VMware, Citrix Systems said that it intends to acquire open-source virtualization company XenSource for about $500 million. Citrix makes so-called thin client software that delivers business applications from servers to desktop computers.

By acquiring XenSource, the company intends to move into the adjacent server and desktop virtualization market. The company's open-source "hypervisor" software, called Xen, lets a single computer run multiple operating systems simultaneously, which is a useful way to replace servers with one, more efficiently used computer.

Tech in court
A federal appeals court appeared unwilling to end a pair of lawsuits that claim the Bush administration engaged in widespread illegal surveillance of Americans. The 9th U.S. Circuit Court of Appeals repeatedly pressed Gregory Garre, the Bush administration's deputy solicitor general, to justify his requests to toss out the suits on grounds they could endanger national security by possibly revealing "state secrets."

At the heart of both cases is the U.S. Justice Department's argument that any lawsuit claiming illegal activity on behalf of AT&T and the National Security Agency--even if the eavesdropping is known to have taken place--cannot proceed because it could let enemies and terrorists know how the government's surveillance apparatus works. While no decision was announced Wednesday, and a final ruling might not be reached for months, a three-judge panel of the 9th Circuit pressed prosecutors to justify asking that the case be dismissed based on declarations submitted by senior Bush administration officials.

In another spying case, three CNET News.com reporters sued computer maker Hewlett-Packard, alleging that its investigation tactics amounted to an invasion of privacy and a violation of state rules on business practices. Complaints were filed on behalf of reporters Dawn Kawamoto, Stephen Shankland and Tom Krazit in California Superior Court for the County of San Francisco. Kawamoto's husband, plus Shankland's wife and parents also filed their own suits Wednesday, according to court documents. All seek unspecified damages.

The suits come nearly a year after HP's investigation methods came under scrutiny from law enforcement officials and the federal government. The company acknowledged in September that investigators it hired spied on the three News.com reporters, as well as on journalists from BusinessWeek, The New York Times, The Wall Street Journal and Associated Press. The covert operation was an attempt to expose a media leak from the company's board.

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